Only 15% of European companies plan their workforce more than three years in advance, suggesting that many companies may soon face key shortages in skills as the 'double whammy' of falling birth rates and rising numbers of baby boomers entering retirement shrinks the size of the workforce, according to a new report published recently by The Boston Consulting Group (BCG) and the European Association of People Management (EAPM).
The report also found that 47% of European companies do not plan their workforce requirements more than a year in advance. Companies that have been forced to cut costs and reduce workers during the recession may struggle to find the people they need when growth eventually returns. Companies therefore need to consider the long-term impact of their actions, even in times of crisis, recommends the report.
“In ten years, the scarcest resource for a company will be people,” says Rainer Strack, co-author of the report. “Companies should understand how their workforce will develop, which job categories drive the business, and how demand will evolve. With the uncertainty prevailing today, the human resources department should analyse different scenarios to figure out whether and how to find, hire, retrain, outsource, or lay off employees.”
The report, ‘Creating People Advantage: How to Tackle the Major HR Challenges During the Crisis and Beyond,’ analyses a survey which asked executives to rate the future importance of 21 HR topics. Despite the crisis, managing talent remained the most urgent future topic in 2009, as it was in 2007, when the previous survey was conducted.
“This topic is vital for companies today and in the future, and they know it. Other topics, such as managing work–life balance and managing corporate social responsibility, are viewed as luxuries these days,” said Rudolf Thurner, President of the EAPM.
The report recommends that businesses need to calculate how different strategic scenarios will affect the demand for specific job categories, and they need to determine whether there is an adequate supply of employees – either internally or in the job market.
Strategic workforce planning, however, requires fundamental changes in HR practices, says Jean-Michel Caye, co-author of the report. “Besides engaging in strategic work force planning, companies should also tightly link their overall corporate strategy with their HR practices and rely on metrics that track and prove the performance of people and HR processes.”